Annual Report 2016 - malaysiastock.biz joint venture agreement with PT Mitra Samaya, Indonesia, PT...

(Company No. 876057-U)

Annual Report2016

PART I

01 Corporate Profile

02 Corporate Information

03 Profile of Directors

06 Key Senior Management

07 Executive Chairman’s Statement

11 Management Discussion & Analysis

14 Awards, Menu Offerings and Marketing & Promotions

18 Corporate Structure

19 Group Financial Summary

20 Group Financial Highlights

21 Statement on Corporate Governance

32 Statement on Risk Management and Internal Control

35 Audit and Risk Management Committee Report

ConTenTs

PART II

01 - 80 Financial Statements

81 Recurrent Related Party Transactions of a Revenue or Trading Nature

85 Other Information

86 Statement of Directors’ Shareholdings

88 Statistics on Shares and Warrants

92 Notice of Annual General Meeting

Form of Proxy

CoRPoRATe PRofIle

BeRJAYA fooD BeRHAD (“BFood”) was incorporated in Malaysia on 21 October 2009. It was converted into a public limited company on 3 December 2009 and listed on The Main Market of Bursa Malaysia Securities Berhad on 8 March 2011. As part of The Listing Scheme, Berjaya Roasters (M) Sdn Bhd (“BRoasters”) was acquired and became a wholly-owned subsidiary of BFood in January 2011.

BRoasters is engaged in the development and operation of the Kenny Rogers Roasters (“KRR”) chain of restaurants in Malaysia. On 26 July 2011, BFood entered into a conditional joint venture agreement with PT Mitra Samaya, Indonesia, PT Harapan Swasti Sentosa, Indonesia and PT Boga Lestari Sentosa, Indonesia (“PT Boga”) to develop and operate the KRR franchise in Java Island and Bali, Indonesia under PT Boga.

On 19 July 2012, BFood completed the acquisition of 11,500,000 ordinary shares of RM1.00 each, representing 50% equity interest in Berjaya Starbucks Coffee Company Sdn Bhd (“BStarbucks”) for a cash consideration of RM71.7 million. The remaining 50% equity interest was held by Starbucks Coffee International, Inc (“SCI”). On 9 August 2012, BFood completed its Rights Issue and the 115,081,760 new shares and 115,081,760 warrants arising from the Rights Issue was listed on the Main Market of Bursa Malaysia Securities Berhad on 13 August 2012. On 18 September 2014, BFood completed the acquisition of 11,500,000 ordinary shares of RM1.00 each, representing the remaining 50% equity interest in BStarbucks not owned by BFood for a total cash consideration of USD88,000,000 (equivalent to about RM279.52 million). BStarbucks is now a 100% owned subsidiary of BFood.

On 7 December 2012, BFood acquired 100% equity interest in Jollibean Foods Pte Ltd, Singapore (“Jollibean Foods”) for a cash consideration of RM19.02 million. On 13 March 2013, BFood incorporated a new wholly-owned subsidiary, Berjaya Jollibean (M) Sdn Bhd (“BJollibean”).

On 7 October 2013, Berjaya Food (International) Sdn Bhd (“BFI”), a wholly-owned subsidiary of BFood entered into a Joint Venture Cum Shareholders’ Agreement with Deluxe Daily Food Sdn Bhd (“Deluxe”) for the subscription of 80% equity interest in Berjaya Food Supreme Sdn Bhd, a Brunei Darussalam-incorporated company to undertake the operations of “Starbucks Coffee” chain of cafes in Brunei Darussalam for a total cash consideration of about BND2.40 million (or about RM6.20 million). The remaining 20% was subscribed by Deluxe.

On 8 July 2014, BFI incorporated a new subsidiary, Berjaya Roasters (Cambodia) Limited (“BRCL”), in the Kingdom of Cambodia to develop and operate the KRR chain of restaurants in Cambodia.

KennY RoGeRs RoAsTeRs (“KRR”)

BFood’s holding company, Berjaya Group Berhad (“BGroup”) effectively holds the worldwide KRR franchise following BGroup’s acquisition of KRR International Corp, USA in April 2008. There are currently 100 KRR restaurants across Malaysia. KRR celebrated its 20th anniversary in April 2015.

KRR restaurants feature rotisserie-roasted chicken as their main core product complemented by a variety of hot and cold side dishes and KRR’s famous muffins, vegetable salads, pasta, soups, desserts, sandwiches and beverages served in a friendly and comfortable environment. All KRR restaurants serve their customers in a full service, mid-casual dining setting with free “Wi-Fi” services, providing customers with a wholesome dining experience. The Group also introduced ROASTERS Catering & Delivery and opened the first KRR drive-thru restaurant in Asia at Setia Tropika, Johor Bahru.

sTARBUCKs

Starbucks in Malaysia is operated by BStarbucks. From its first store opening in Kuala Lumpur on 17 December 1998, BStarbucks has expanded to Sabah and Sarawak and celebrated its 17th year of operations in December 2015. BStarbucks has more than 215 stores nationwide and is recognised as the leading specialty coffee company and industry benchmark in Malaysia.

BStarbucks also introduced its first drive-thru concept store in December 2009 in Johor Bahru. In 2012, it opened its first suburban store in Seri Manjung, Perak. As at 30 April 2016, it has 24 drive-thru concept stores which are located in Klang Valley, Johor, Penang, Perak and Pahang.

On 16 February 2014, BStarbucks spread its wings to Brunei Darussalam, opening its first store at the Mabohai Shopping Complex. The store features a traditional coffee bar also known as “slow bar”; which allows customers to savour their coffee using the “pour over” brewing method. On 7 September 2014, BStarbucks opened its first drive-thru concept store in Beribi. As at 30 April 2016, there are 4 Starbucks stores in Brunei.

JollIBeAn

Jollibean Foods was incorporated in November 1993. Presently, there are a total of 33 “Jollibean” outlets, 12 “Sushi Deli” outlets, all of which are based on the Quick Service Concept, and 2 “Kopi Alley” outlets in Singapore.

Jollibean’s signature products are its fresh daily made “Jollibean” soy milk drinks using Grade A, non-genetically modified organism (non-GMO), identity-preserved Canadian soy beans to ensure its quality. It also introduced traditional snacks such as the street pancake – Mee Chiang Kueh – which complements its soy milk drinks.

“Kopi Alley” is a traditional coffee cafe concept which offers traditional food & beverage items such as coffee, tea, toasted bread, nasi lemak and mee siam. “Sushi Deli” serves an array of “pick-and-choose” sushi, assorted sashimi sets, sushi & maki sets, Japanese salads, bento sets, party platters and Japanese sweets like Tofu Cheese Cake.

Berjaya Jollibean (M) Sdn Bhd opened its first kiosk at Berjaya Times Square in December 2013.

BERJAYA FOOD BERHAD (876057-U)Annual Report 2016 01

CoRPoRATe InfoRmATIon

AUDIT AnD RIsK mAnAGemenT

CommITTee

Datuk Zainun Aishah Binti Ahmad

Chairman/Independent

Non-Executive Director

Dato’ mustapha Bin Abd Hamid

Independent Non-Executive Director

Tan Thiam Chai

Non-Independent Non-Executive

Director

seCReTARIes

su swee Hong

(MAICSA No. 0776729)

Tham lai Heng michelle

(MAICSA No. 7013702)

sHARe ReGIsTRAR

Berjaya Registration Services Sdn Bhd

Lot 06-03, Level 6, East Wing

Berjaya Times Square

No. 1, Jalan Imbi

55100 Kuala Lumpur

Tel : 03-2145 0533

Fax : 03-2145 9702

AUDIToRs

Ernst & Young (AF:0039)

Chartered Accountants

Level 23A, Menara Milenium

Jalan Damanlela

Pusat Bandar Damansara

50490 Kuala Lumpur

Tel : 03-7495 8000

Fax : 03-2095 5332

ReGIsTeReD offICe

Lot 13-01A, Level 13 (East Wing)

Berjaya Times Square

No. 1, Jalan Imbi

55100 Kuala Lumpur

Tel : 03-2149 1999

Fax : 03-2143 1685

PRInCIPAl BAnKeRs

AmBank (M) Berhad

Malayan Banking Berhad

RHB Bank Berhad

sToCK eXCHAnGe lIsTInG

Main Market of Bursa Malaysia

Securities Berhad

sToCK sHoRT nAme

BJFOOD (5196)

PlACe of InCoRPoRATIon

AnD DomICIle

Malaysia

BoARD of DIReCToRs

Dato’ sri Robin Tan Yeong ChingExecutive Chairman

Dato’ lee Kok ChuanChief Executive Officer

Tan Thiam ChaiNon-Independent


Dato’ Zurainah Binti musaNon-Independent


Datuk Zainun Aishah Binti AhmadIndependent Non-Executive Director

Dato’ mustapha Bin Abd HamidIndependent Non-Executive Director

BERJAYA FOOD BERHAD (876057-U)Annual Report 201602

PRofIle ofDIReCToRs

DATo’ sRI RoBIn TAn YeonG CHInG42 years of age, Malaysian, Male

Executive Chairman

DATo’ lee KoK CHUAn57 years of age, Malaysian, Male

Chief Executive Officer

He was appointed to the Board on 20 May 2010 as the

Executive Chairman. He is also a member of the Remuneration

Committee and Employees’ Share Option Committee.

He graduated with a Bachelor of Social Science degree in

Accounting/Law from the University of Southampton, United

Kingdom, in 1995. He joined Berjaya Group Berhad in 1995

as an Executive and subsequently became the General

Manager, Corporate Affairs in 1997.

Currently, he is the Chairman and Chief Executive Officer

of Berjaya Corporation Berhad, the Chief Executive Officer

of Berjaya Sports Toto Berhad and an Executive Director of

Sports Toto Malaysia Sdn Bhd. He is also the Chairman of

Berjaya Media Berhad, Sun Media Corporation Sdn Bhd and

Informatics Education Ltd, Singapore and a Director of Atlan

Holdings Bhd, Berjaya Sompo Insurance Berhad, Berjaya Golf

Resort Berhad, KDE Recreation Berhad, Berjaya Roasters (M)

Sdn Bhd and Berjaya Starbucks Coffee Company Sdn Bhd.

He also holds directorships in several other private limited

companies in the Berjaya Corporation group of companies.

His father, Tan Sri Dato’ Seri Vincent Tan Chee Yioun, is a

major shareholder of the Company.

He was appointed to the Board on 20 May 2010 as the Chief

Executive Officer. He is also the Chairman of the Employees’

Share Option Committee.

He graduated with a Bachelor of Economics (Accounting

Major) from Monash University, Melbourne, in 1983 and is

a Fellow Member of the Institute of Chartered Accountants

in Australia. He has over 10 years of working experience in

the fields of accounting, auditing and corporate services with

major international accounting firms including Messrs Ernst

& Whinney (Kuala Lumpur) (now known as Ernst & Young),

Messrs Arthur Young (Melbourne) and subsequently Messrs

Ernst & Young (Melbourne). He joined Berjaya Land Berhad as

Senior Manager, Internal Audit in 1994 and was responsible

for its internal audit functions. He was an Executive Director

of Berjaya Group Berhad from January 2000 to September

2001.

He is currently a Director of Berjaya Auto Berhad, Berjaya

Capital Berhad, Berjaya Roasters (M) Sdn Bhd and Berjaya

Starbucks Coffee Company Sdn Bhd. He also holds

directorships in several other private limited companies in

the Berjaya Corporation group of companies.


PRofIle ofDIReCToRs

TAn THIAm CHAI 57 years of age, Malaysian, Male

Non-Independent Non-Executive Director

DATo’ ZURAInAH BInTI mUsA54 years of age, Malaysian, Female

Non-Independent Non-Executive Director

He was appointed to the Board on 20 May 2010 as a Non-

Independent Non-Executive Director. He is also a member of

the Nomination Committee and Audit and Risk Management

Committee.

He graduated with a Diploma in Commerce (Financial Accounting)

from Kolej Tunku Abdul Rahman (now known as Tunku Abdul

Rahman University College) and also completed The Association

of Chartered Certified Accountants (UK) professional course in

1981. He is a Fellow member of the Association of Chartered

Certified Accountants (UK) since 1990 and also a member of the

Malaysian Institute of Accountants.

He started work with an accounting firm in Kuala Lumpur for about

2 years and thereafter served in various Finance and Accounting

positions with the Hong Leong group of companies in Malaysia

as well as in Hong Kong for about 8 years. He joined Berjaya

group of companies in early 1991 as a Finance Manager of an

operating subsidiary and was promoted to Operation Manager

later that year. In 1992, he was transferred to the Corporate Head

Office of Berjaya Group Berhad to head the Group Internal Audit

function and subsequently in 1993, he was promoted to oversee

the Group Accounting function of Berjaya Group Berhad.

Currently, he is the Chief Financial Officer of Berjaya Corporation

Berhad. He is also an Executive Director of Berjaya Land Berhad,

a Director of Atlan Holdings Bhd, Indah Corporation Berhad,

Cosway Corporation Berhad, Berjaya Vacation Club Berhad,

Tioman Island Resort Berhad, Berjaya Starbucks Coffee Company

Sdn Bhd, Cosway Corporation Limited (Hong Kong) and Taiga

Building Products Ltd (Canada).

He also holds directorships in several other private limited

companies in the Berjaya Corporation group of companies.

She was appointed to the Board on 7 March 2014 as a Non-

Independent Non-Executive Director.

She obtained her Post Graduate diploma in Human Resource

Management from University of Newcastle, Australia in

1997. She also holds diplomas in Occupational Health And

Safety from University of New South Wales, Australia and

Secretarial Science from the MARA Institute of Technology.

She started work in 1983 and was working in senior capacities

for several organisations, both locally and internationally

before she joined Permata Kancil (M) Sdn Bhd in 1995. She

was the Managing Director of Permata Kancil (M) Sdn Bhd,

a company involved in human resource management and

consultancy, when she left in 2010.

She has more than 15 years of experience in the field of

Human Resource Management and Development as well as

Human Relationship Management. Her experience includes

inter-alia, the designing, developing, managing, organising

and conducting training programmes, seminars and courses

as well as the provision of consulting services relating to

the various aspects of human resource development and

management for organisations in Malaysia, Australia, United

States of America, Indonesia and the Middle East.

Currently, she is an Executive Director of Berjaya Corporation

Berhad, a Director of Uzma Berhad, Tioman Island Resort

Berhad and several other private limited companies.

She is also an Executive Director of Berjaya Times Square

Sdn Bhd and a Director of several subsidiaries of Berjaya

Assets Berhad.


PRofIle ofDIReCToRs

DATUK ZAInUn AIsHAH BInTI AHmAD70 years of age, Malaysian, Female


She was appointed to the Board on 20 May 2010 as an

Independent Non-Executive Director. She is the Chairman

of the Audit and Risk Management Committee, Nomination

Committee and Remuneration Committee. She is also a

member of the Employees’ Share Option Committee.

She graduated with a Bachelor of Economics degree from

University Malaya. She began her career and worked with

Malaysian Industrial Development Authority (“MIDA”), the

Malaysian government’s principal agency for the promotion

and coordination of industrial development in the country for

35 years. In her 35 years of service, she has held various key

positions in MIDA as well as in some of the country’s strategic

council, notably her pivotal role as the National Project

Director in the formulation of the first Malaysian Industrial

Master Plan. She was the Director-General of MIDA for 9 years

and Deputy Director-General for 11 years. Whilst in MIDA, she

also sat on various committees/authorities at national level,

including being a member of the Industrial Coordination Act

Advisory Council, Defence Industry Council and National

Committee on Business Competitiveness Council, Malaysia

Incorporated and the National Project for Majlis Penyalarasan

Perindustrian before retiring in September 2004.

She was previously a Director of Tenaga Nasional Berhad

and Malayan Banking Berhad and resigned on 7 June 2004

and 22 July 2009 respectively. Currently, she is a Director

of Degem Berhad, Scomi Engineering Bhd, Shell Refining

Company (Federation of Malaya) Berhad, British American

Tobacco (Malaysia) Berhad and Pernec Corporation Berhad.

DATo’ mUsTAPHA BIn ABD HAmID63 years of age, Malaysian, Male


He was appointed to the Board on 20 May 2010 as an

Independent Non-Executive Director. He is also a member

of the Nomination Committee, Remuneration Committee and

Audit and Risk Management Committee.

He graduated from the Royal Military College in 1972 and

went on to obtain a Bachelor Degree (Honours) in Social

Science from Universiti Sains Malaysia, Penang, in 1977, and

a Diploma in Public Management from the National Institute

of Public Administration Malaysia (more commonly known as

INTAN) in 1978. He started his career as an Administrative

and Diplomatic Officer of the Research Division in the Prime

Minister’s Department and was posted as the First Secretary

of the Malaysian Embassy in Paris, France (1982-1985).

During his 16 years in the public service sector, he was

also the Consul of Consulate General Malaysia in Medan,

Indonesia (1990-1993) and the Principal Assistant Director

in the Prime Minister’s Department (1993-1994). He is also

a Director of Teo Guan Lee Corporation Berhad and Acmar

FHP Group Berhad. He also holds directorship positions in

several other private limited companies.

Save as disclosed, none of the Directors have:-

1. any family relationship with any directors and/or major

shareholders of the Company;

2. any conflict of interest with the Company;

3. any conviction for offences within the past 5 years other

than traffic offences; and

4. any public sanction or penalty imposed by the relevant

regulatory bodies during the financial year.


KeY senIoR mAnAGemenT

Save as disclosed, none of the Key Senior Management have:-

1. any directorship in public companies and listed issuers;

2. any family relationship with any directors and/or major shareholders of the Company;

3. any conflict of interest with the Company;

4. any conviction for offences within the past 5 years other than traffic offences; and

5. any public sanction or penalty imposed by the relevant regulatory bodies during the financial year.

DATo’ sRI RoBIn TAn YeonG CHInG42 years of age, Malaysian, Male

Executive Chairman

He was appointed to the Board of the Company as

Executive Chairman on 20 May 2010. His profile is

listed in the Profile of Directors on page 03 of this

Annual Report.

He started his career in 1982 when he joined Golden

Arches Restaurants Sdn Bhd (operator of McDonald’s)

as a crew member and graduated from Hamburger

University, Chicago, United States of America (Dean’s

List). He subsequently joined Berjaya Group as a Store

Manager in Berjaya Roasters (M) Sdn Bhd in 1994. He

also spent five years working as Senior Operation

Manager in Berjaya Starbucks Coffee Company Sdn

Bhd from 1998 to 2003 before rejoining Berjaya

Roasters (M) Sdn Bhd as Deputy General Manager

in 2003.

He was appointed as Senior General Manager of

Berjaya Roasters (M) Sdn Bhd on 1 January 2009 and

he currently oversees the entire operation of Kenny

Rogers Roasters in both Malaysia and Indonesia.

lee sIeW WenG53 years of age, Malaysian, Male

Senior General Manager

He was appointed to the Board of the Company as

Chief Executive Officer on 20 May 2010. His profile

is listed in the Profile of Directors on page 03 of this

Annual Report.

DATo’ lee KoK CHUAn57 years of age, Malaysian, Male

Chief Executive Officer

He graduated with Honors from the American Hotel

and Lodging Association, United States of America

majoring in Hospitality Management and Marketing. He

started his career in the hotel industry and subsequently

worked in the Quick Service Restaurant (QSR) industry

before joining Golden Arches Restaurants Sdn Bhd

(operator of McDonald's) as a Restaurant Manager

from 1993 to 1995.

He was a pioneer with Berjaya Starbucks Coffee

Company Sdn Bhd since 1998 and was appointed

as Managing Director of Berjaya Starbucks Coffee

Company Sdn Bhd on 31 October 2012 and Berjaya

Food Supreme Sdn Bhd on 24 September 2013. He

is currently responsible for the overall management

and business strategy for Starbucks in both Malaysia

and Brunei.

sYDneY lAWRAnCe QUAYs48 years of age, Malaysian, Male

Managing Director


eXeCUTIVe CHAIRmAn’ssTATemenT

On behalf of the Board of Directors of Berjaya Food Berhad (“BFood”), I am pleased to present the Annual Report and Financial Statements for the financial year ended 30 April 2016.

fInAnCIAl ResUlTs

For the financial year ended 30 April 2016, the Group recorded

a higher revenue of RM554.36 million in comparison to a

revenue of RM376.78 million in the previous financial year.

Pre-tax profit for the financial year under review increased to

RM35.62 million from RM23.6 million in the previous financial

year, after excluding the net remeasurement gain of about

RM159.2 million.

The increase in both revenue and pre-tax profit were mainly

attributed to the full effect of consolidating Berjaya Starbucks

Coffee Company Sdn Bhd (“BStarbucks”), which became a

wholly-owned subsidiary of the Group in the second quarter

of the financial year 2015.

DIVIDenD

For the financial year ended 30 April 2016, the Group had

declared and paid a total dividend of 4.25 sen single-tier

dividend per share (5.75 sen single-tier dividend per share

for the previous financial year ended 30 April 2015).

The total dividend paid was approximately RM16.01 million

which represented approximately 75% of the attributable

profit of the Group for the financial year ended 30 April 2016.

CoRPoRATe soCIAl ResPonsIBIlITY (“CsR”)

BFood and its subsidiaries are committed to making a

positive impact to the communities where it operates through

various CSR initiatives.

Reaching out and Giving Back to the Communities

Berjaya Roasters (M) Sdn Bhd (“BRoasters”) continued its

tradition of giving back to the communities through its annual

programmes such as the ROASTERS Chicken Run and the

Wishing Tree campaign under the Kenny Rogers Roasters

(“KRR”) Community Chest programme started in 2005.

The 11th Annual ROASTERS Chicken Run in 2015 successfully

raised RM66,000 in support of the Food Aid Foundation to

provide 2,000 sets of nutritious meals for more than 20

charitable homes as well as monthly provisions for poor

families and other organisations supported by the

Foundation. Since its inception, the ROASTERS Chicken Run

has raised more than RM600,000 for numerous charitable

organisations and homes.

The 11th Annual Wishing Tree campaign continued to bring

cheer and smiles to more than 2,500 children nationwide.

Since its initiation, the campaign has fulfilled more than

16,800 wishes. As part of the “I Love i.care for My Community”

campaign, BRoasters also distributed more than 200 meals

and red packets to five charitable homes during the festive

seasons.

BStarbucks introduced its first premium Starbucks Reserve Store at the Gardens Mall, Kuala Lumpur in October 2015.

KRR’s 11th Annual ROASTERS Chicken Run 2015 raised RM66,000 in support of the Food Aid Foundation.



Berjaya Starbucks Coffee Company Sdn Bhd (“BStarbucks”)

continued to empower the lives of the local communities

through the Connecting Communities programme launched

in 2013. As part of its ongoing initiative to promote

mengkuang-based handicraft products in partnership with

Craft CT 01 Enterprise, BStarbucks featured a large wall

embedded with local elements such as reclaimed wood,

weaved mengkuang mats and burlap bags together with a

long community table with hand carvings in its 200th

Starbucks store at the ANSA Hotel Kuala Lumpur. The full

range of Starbucks mengkuang-based products such as the

hot cup sleeves, coasters, bookmarks, pouches, placemats

and cardholders are available for sale in three selected

Starbucks stores while selected mengkuang-based products

are retailed at fifty stores nationwide. Through the programme,

BStarbucks has purchased mengkuang-based products worth

a total of RM134,117 from the local community in Felda Chini

Timur Satu, Pekan Pahang.

In support of the local banana farming communities,

BStarbucks purchased raw bananas from two more

communities, namely Kampung Parit Serong and Kampung

Sungai Gulang-Gulang in Kuala Selangor, in addition to

Kampung Lubuk Jaya. Since March 2016, all Starbucks

stores in the Peninsular Malaysia have been using raw

bananas from the three villages for the production of its

Signature Banana Chocolate Chip Muffins.

In April 2016, BStarbucks celebrated its 6th annual Global

Month of Service (“GMoS”) with 213 partners (employees)

and 289 customers dedicating a total of 3,012 community

service hours for the Empowering Young Minds programme

that ran concurrently in 9 locations across Malaysia. The

programme aimed to empower children to express their

thoughts and creativity through writing. Over the years,

BStarbucks has engaged with 3,573 volunteers and

participated in more than 123 projects contributing

approximately 59,665 community service hours for this

annual initiative.

BStarbucks’ Community Service Grant programme provided

USD10,000 for the second consecutive year in support of

the E-learning programme for the children of Kampung

Lubuk Jaya, Kuala Selangor in collaboration with Persatuan

Kebajikan Hope Worldwide. The programme, conducted at

the Starbucks Community Computer Centre, benefitted a

total of 205 students with 103 hours of classes conducted so

far.

In line with its objective of promoting literacy and education,

BRoasters and BStarbucks supported the operating cost of

two community education centres providing free English,

computer and personal development lessons to

underprivileged children and adults across the country.

Workplace

BFood and its subsidiaries continued to place greater

emphasis on human capital development through various

employee development programmes such as the Annual

Business Plan Meetings and Leadership Conventions as well

as other reward and incentive programmes. To foster a

cohesive and productive working environment, several

sporting events and team-building activities were also

organised.

The mengkuang-based handicraft products are available at selected Starbucks outlets.

BStarbucks’ volunteers guiding the children to express their creativity through writing and drawing in the Empowering Young Minds programme.

Interactive and team-building activities during BRoasters’ Annual Business Plan Meeting.



As food and service quality are two important elements for

the food and beverage industry, BRoasters introduced

various quality control initiatives such as the Total Quality

Management Award and Mystery Guest Snapshot Award to

further improve its business competitiveness.

BStarbucks also organised leadership development

programmes and professional certification programmes for

employees of different levels to further enhance their skills

and knowledge. In September 2015, BStarbucks held its first

Leadership Conference for Assistant Store Managers in Port

Dickson, Negeri Sembilan. The conference themed “Make It

Personal, Inspire & Engage” was attended by 100 assistant

store managers who participated in various team-building

programmes and activities revolving around the business

and the company’s missions and goals.

In December 2015, BStarbucks celebrated its 17th

anniversary with 600 partners (employees). Several awards

such as the Service Awards and Operations Awards were

presented to dedicated partners in recognition of their

enthusiasm and outstanding performance.

small steps to Care for the environment

BRoasters and BStarbucks supported the “Shelter in The

Sea for Marine Life” coral reef propagation project in August

2015. The project which was initiated by the Berjaya

Group’s Founder, Tan Sri Dato’ Seri Vincent Tan Chee Yioun,

involved the laying of 67 concrete pipes, ranging from one to

two metres in diameter, on the seabed between Berjaya

Tioman Resort Dive Centre and Renggis Island off Johor to

encourage coral growth and also provide protection for

marine life.

In an effort to raise awareness on green consciousness,

BRoasters introduced its second generation of the “i.Care

Box” in 2015. Since its introduction in 2011, more than

128,000 units have been sold.

As part of the company’s recycling efforts, BStarbucks

continued to provide soil-enriching coffee grounds to its

customers under the “Grounds for Your Garden” programme

with 89% of its stores participating in the programme. The new

packaging of 1kg bag of soil-enriching coffee grounds was

introduced in January 2016 with a total of 77,172 bags

provided by BStarbucks to its customers between January to

April 2016.

In March 2016, BStarbucks collaborated with the Forestry

Department of Klang to plant 200 mangrove trees in Pulau

Indah, Selangor to preserve the ecosystem of the island.

BStarbucks also continued to encourage its customers to

bring their own tumblers to reduce the usage of disposable

cups under its “Bring Your Own Tumbler” programme. In

conjunction with Earth Hour held in March 2016, all Starbucks’

stores nationwide turned off its non-essential lights for one

hour in support of the global campaign that aimed to raise

awareness about climate change. A series of special

promotions were offered to encourage customers to

participate in this global initiative.

BStarbucks’ first Leadership Conference for Assistant Store Managers was held in Port Dickson, Negeri Sembilan.

The second generation of the “i.Care Box” was introduced by BRoasters in 2015.

Starbucks’ stores nationwide turned off their non-essential lights for one hour in support of the Earth Hour global campaign held in March 2016.



fUTURe PRosPeCTs

The Malaysian economy recorded a growth of 4.2% in the

first quarter of 2016 and is expected to sustain a stable

growth trend despite challenges from the economic

environment domestically and globally. However, domestic

consumption is projected to grow at a moderate pace as a

result of consumers adjusting to higher living costs and

being more cautious in spending.

Despite the economic uncertainties and weak consumer

sentiments, the Group still recognises potential in different

areas and will improve on its expansion plans to stimulate

further growth. The Group will continue to focus on its

business expansion at strategic locations in both its local

and overseas markets depending on the strength and target

markets of its respective brands.

In addition, the respective brands under the Group will also

continue to introduce innovative menu offerings and new

product lines to meet public demand in this competitive

industry. Loyalty card programmes and rewarding promotions

will also be carried out to drive brand loyalty and to attract

the interest of potential customers. The brands will also

leverage on digital and social media platforms to engage

with the public to further strengthen brand presence and

foster stronger relationships with their customers.

The Group’s food and beverage businesses will also review

their operational plans to optimise resources and improve on

operational efficiency in this challenging environment. The

Group expects BStarbucks to maintain its revenue growth

momentum, especially with its new fast moving consumer

goods business, and contribute positively to the operating

results of the Group going forward.

APPReCIATIon

On behalf of the board, I would like to express our gratitude

to all our loyal customers and business partners for their

unwavering confidence and support towards the Group.

I would also like to extend my appreciation to my fellow

colleagues on the Board, the management team, and the

committed front line staff who have worked hard in

contributing to the growth of the Group. I believe that with

teamwork and commitment from everyone in our big family,

the Group will continue to grow and strive towards more

success in the future.

Dato’ sri Robin Tan Yeong Ching

Executive Chairman

15 August 2016

Interior view of the Starbucks store at the Kuala Lumpur International Airport’s Contact Pier.

Jollibean’s outlet in Ng Teng Fong General Hospital located at Jurong East, Singapore.

Exclusive Starbucks Hari Raya Aidilfitri Card launched by BStarbucks in conjunction with the festive celebration.


mAnAGemenTDIsCUssIon & AnAlYsIs

BeRJAYA RoAsTeRs (m) sDn BHD

overview

Berjaya Roasters (M) Sdn Bhd (“BRoasters”) is a wholly-owned

subsidiary of Berjaya Food Berhad (“BFood”). Incorporated in

1994, BRoasters is the master franchisee of Kenny Rogers

Roasters (“KRR”) chain of restaurants in Malaysia and is

principally engaged in the development and operation of the

KRR restaurants. As at 30 April 2016, there are 100 KRR

restaurants across Malaysia.

Revenue

BRoasters registered a 10.6% decrease in revenue, from

RM101.9 million in the previous financial year to RM91.1 million

for the current financial year under review. The lower revenue

was mainly attributed to weak consumer spending sentiment

as a result of the uncertain economic climate and the impact

from the implementation of the Goods and Services Tax (“GST”).

Profit Before Tax

BRoasters’ profit before tax decreased to RM2.5 million from

RM9.5 million in the previous financial year mainly due to lower

sales transactions recorded, higher rental expenses, higher

raw material costs and higher operating costs.

Business strategy and future Prospects

BRoasters will introduce a new range of products and enticing

menu offerings, as well as capitalise on its KRR Reload Card

Loyalty Programme to encourage consumer spending. The

company will also review its operational efficiency for business

sustainability and to remain competitive in the ever challenging

food and beverage industry. BRoasters will continue to embark

and leverage on online marketing and digital media advertising

to increase its brand awareness among teenagers and young

working adults.

PT BoGA lesTARI senTosA

overview

PT Boga Lestari Sentosa (“PT Boga”) was incorporated in

Indonesia in June 2006, and is involved in the development

and operation of the KRR chain of restaurants in Java Island,

Indonesia. As at the financial year ended 30 April 2016, PT

Boga operates 23 KRR restaurants in Indonesia.

Revenue

PT Boga registered a 7.5% decrease in revenue, from RM13.3

million in the previous financial year to RM12.3 million for the

financial year ended 30 April 2016. The decrease was mainly

due to the closure of five restaurants during the financial year

under review.

loss Before Tax

PT Boga’s loss before tax reduced by 46.9% to RM7.6 million

compared to the RM14.3 million loss before tax recorded in

the previous financial year. The improvement was mainly due

to lower operating costs resulting from the closure of non-

performing stores during the financial year under review.


Moving forward, PT Boga will focus on increasing sales by

embarking on more joint promotions and strategic collaborations

with main telecommunication companies and some of the

established banks and corporations in Indonesia. PT Boga will

also introduce a variety of new food products that suit the local

market.

Khairy Jamaluddin, Minister of Youth and Sports presenting the Social Media Excellence Award to BRoasters at the World Bloggers & Social Media Awards 2015.

One of the new KRR Card designs, the ROASTERS Chicken Run’15 card.


BeRJAYA sTARBUCKs Coffee ComPAnY sDn BHD

overview

Berjaya Starbucks Coffee Company Sdn Bhd (“BStarbucks”), a

wholly-owned subsidiary of BFood, was incorporated in

Malaysia on 7 May 1998 under the name of Berjaya Coffee

Company (M) Sdn Bhd and assumed its present name on

16 September 2004.

The company is in the business of providing high-quality whole

bean coffees, along with fresh, rich-brewed coffees, Italian-

style espresso beverages, cold blended beverages, a variety

of pastries and confections, coffee-related equipment and

accessories, and a selection of premium teas. As at 30 April

2016, BStarbucks has 215 stores across Malaysia.

Revenue

For the financial year ended 30 April 2016, BStarbucks

recorded a revenue growth of 16.85% to RM404.9 million from

RM346.5 million in the previous financial year. The increase in

revenue was mainly attributed to rapid retail store expansion

where the number of stores increased from 193 stores to 215

stores.

The introduction of new beverages and various marketing

promotions on different platforms were put in place to continue

capturing public interest towards Starbucks products. The

Starbucks Card Programme recorded a strong card transaction

usage of 46%, contributing a total of RM217.6 million to

BStarbucks’ revenue as compared to the previous financial year

of RM153.6 million. As at 30 April 2016, there were a total of 1.35

million registered My Starbucks Rewards members and a total of

4.2 million Starbucks Cards in active circulation nationwide.

Profit Before Tax

Despite the higher operating costs and cautious consumer

spending sentiment, BStarbucks registered a higher profit

before tax of RM54.4 million for the financial year under review

compared to RM52.6 million in the previous financial year. The

increase in profit before tax was attributed to its ongoing

attractive promotional campaigns and cost management

strategy.


BStarbucks will continue to strive for higher growth by targeting

to open another 25 new stores in the financial year 2017. The

company will focus on the unique store design and concept to

strengthen its position as the market leader of premium coffee

beverages in Malaysia.

BStarbucks will continue to improve its menu offerings with

more innovative food and beverage products to resonate with

customer demands. The Starbucks Card will also remain a main

focus of BStarbucks through the introduction of innovative card

designs and reward programmes to drive brand loyalty and

spending frequency. In addition, BStarbucks will continue to

leverage on mobile applications and social media to increase

brand affiliation and connectivity with customers.

BeRJAYA fooD sUPReme sDn BHD

overview

Berjaya Food Supreme Sdn Bhd (“BFS”) was incorporated in

Brunei on 24 September 2013. It is 80%-owned by Berjaya

Food (International) Sdn Bhd and is principally engaged in the

operation of Starbucks retail stores in Brunei.

The first Starbucks store in Brunei was opened in Mabohai

Shopping Complex on 16 February 2014. To date, BFS has 4

Starbucks stores including 1 drive thru concept store.

Revenue

For the financial year ended 30 April 2016, BFS’s revenue

increased to RM7.8 million from RM6.9 million in the previous


Starbucks store at Batu Feringghi, Penang. The Starbucks Coffee Wafer Rolls introduced by BStarbucks during Chinese New Year.


financial year. The increase in revenue was mainly due to the

opening of an additional store at Kuala Belait, and the effective

execution of various marketing programmes, together with

event collaborations with corporate and government bodies.

The Kuala Belait store has attracted many expatriates working

in major oil and gas companies as well as local and foreign

students from the international schools around the area.

Profit Before Tax

For the financial year ended 30 April 2016, the profit before tax

of BFS decreased to RM578,000 from RM975,000 in the previous

financial year. The decrease was mainly due to higher occupancy

cost as a result of the full rent consolidation of the fourth store with

higher seating capacity which opened at the end of 2015. In

addition, the lower profit was also impacted by the additional

depreciation charge on capital expenditure incurred for the

adoption of innovative design in the newly opened store.


BFS will focus on sales growth as one of its key performance

indicators and continue with its store expansion plan with the

target of opening one new store in the financial year 2017.

BFS will also continue to develop innovative food and beverage

product offerings and carry out loyalty programmes and

activities to strengthen the Starbucks brand position in Brunei.

JollIBeAn fooDs PTe lTD

overview

Jollibean Foods Pte Ltd (“Jollibean Foods”) is a wholly-owned

subsidiary of BFood. The company holds the sole and exclusive

worldwide rights to develop, operate and manage all outlets,

stalls and kiosks under the brand names of “Jollibean”, “Sushi

Deli” and “Kopi Alley”.

The Jollibean brand has become a household name since its

introduction in 1995, and is one of the leading soya bean food


and beverage retail chains in Singapore. As at 30 April 2016,

Jollibean Foods has 47 outlets in Singapore.

Revenue

For the financial year ended 30 April 2016, Jollibean Foods

registered a revenue of RM36.7 million compared to RM38.4

million in the previous financial year. The decline in revenue was

mainly due to the closure of its key outlets in the shopping malls

which underwent upgrading programmes, coupled with less

than satisfactory performance of its newly opened outlets and

the generally weak consumer spending sentiment in Singapore.

loss Before Tax

For the financial year ended 30 April 2016, Jollibean Foods

recorded a net loss before tax of RM2.4 million compared to a

net loss before tax of RM206,000 in the previous financial year.

The loss was mainly due to lower sales, new outlets with higher

rents not achieving the minimum sales projection, rising

manpower costs, higher depreciation due to capital expenditure

on new outlets and impairment loss from its investment in a

subsidiary in Malaysia.


Moving forward, Jollibean Foods will focus on certain core

areas under its “Comprehensive Turnaround Plan”. Through its

structure optimisation programme, Jollibean Foods will employ

talents to address the inconsistency of its product quality

across all the retail outlets in Singapore and identify strategic

and potential locations to set up new retail outlets as part of its

business growth plan.

Jollibean Foods will also review its operations and administrative

procedures in order to practise a more cost efficient approach

to reduce its operating and administrative costs. In addition,

the company will continue to strengthen its brand name as one

of the leading soya bean food and beverage retail chains in

Singapore via extensive social media and digital marketing to

penetrate a wider group of consumers, particularly the younger

generation and working adults.

Hari Raya gathering with digital followers and business partners at Starbucks Brunei.

Jollibean 6-in-1 Dip Mini Rolls.


AWARDs, menU offeRInGs AnDmARKeTInG & PRomoTIons

AWARDs ReCoGnITIon

During the financial year under review, the companies under Berjaya Food Berhad received numerous awards in recognition of their outstanding performance in different areas.

Berjaya Roasters (M) Sdn Bhd’s (“BRoasters”) constant efforts in initiating Corporate Social Responsibility activities once again won them the Best Franchise Corporate Social Responsibility Award at the Malaysia Franchise Awards for the second year in a row. KRR also received the Social Media Excellence Award under the Food & Beverage category in the Malaysia Social Media Week Awards 2016 for the second consecutive year for their active engagement in the social sphere with good social media practices.

Berjaya Starbucks Coffee Company Sdn Bhd (“BStarbucks”) has always recognised the importance of human capital development within the organisation. In recognition of its effort in this area, the company was awarded the Silver Award Winner (Employer of Choice Category) and the Gold Award Winner for HR Leader of the Year (June Beh, Director of Partner Resources & Compliance, Starbucks Malaysia & Brunei) at the Malaysia HR Awards 2015 organised by the Malaysian Institute of Human Resource Management (MIHRM) in October 2015.

BStarbucks was also recognised by HR ASIA as one of the Best Companies to Work For in Asia 2015, and was presented with the Malaysia Best Employer Brand Awards 2016 by Employer Branding Institute in April 2016.

menU offeRInGs

The Group has always been innovative in developing new menu offerings to adapt to the ever changing taste and demands of the consumers.

Kenny Rogers Roasters (“KRR”) has continued to advocate healthy living by providing well-balanced meals which is aligned to its brand image. Seasonal food promotions such as the Seri Lagenda Chicken, Honey Glazed Chicken, Hot Fiery Feast, Golden Abundance Meal, and more were introduced during the financial year under review.

To provide more wholesome food options, KRR introduced 14 dishes to its menu, among which included Chunky Veggie, Kenny’s Wholesome Meal for sharing, Teriyaki Chicken Meal, Teriyaki Chicken Lite Meal, Teriyaki Chicken & Soup Meal, Grilled Beef Steak, Classic Chicken Sandwich and ‘Egg’cellent Sandwich. This also included the Lite Up Your Meal selection that provides diners with a hearty meal in petite portions such as the T-Chic Rice, Italian Delight and House Favourite.

As the leading specialty coffee company in Malaysia, Starbucks Malaysia has always been innovative in its menu offerings in order to strengthen its brand position in the market. During the financial year under review, the company revamped its food menu and launched a new range of food offerings to meet its customers’ needs. The new variety of food included Forest Mushroom Soup, Herbs Chicken and Tomato, Potato

Kenny’s Wholesome Meal is one of the new dishes that was introduced by KRR to provide more options of well-balanced meals.

BRoasters received the Best Franchise Corporate Social Responsibility Award for the second consecutive year at the Malaysia Franchise Awards 2015.

BStarbucks was recognised as one of the Best Companies to Work For in Asia 2015 by HR ASIA.

Starbucks Malaysia launched a variety of new food offerings for its customers.



Gratin Pie, Delectable Strawberry White Chocolate Roll, Banana Greek Yogurt with Granolas and many more items, all of which customers can pair with their favourite coffee. Starbucks Malaysia also introduced their new refreshing beverages, the Starbucks Fizzio Sparkling Beverages in August 2015. The Starbucks Fizzio Sparkling Beverages are specially handcrafted for each customer and are available in two flavours – the Lemon Ginger Starbucks Fizzio with Mango Jelly Sparkling Beverage and Summer Berry Starbucks Fizzio with Mango Jelly Sparkling Beverage.

Starbucks Malaysia also introduced several festive themed offerings. During the Hari Raya Aidilfitri season, Starbucks Malaysia presented the Exclusive Assorted Zesty Pineapple Delights which came in Pineapple, Chocolate Strawberry and Green Tea Blueberry flavours while the Starbucks Exclusive Coffee Wafer Rolls were introduced for the Lunar New Year. The Starbucks Mid-Autumn Mooncakes were a unique blend of fusion Japanese, modern Western and localised flavours, namely the Chewy Nutty Cranberry Mooncake, Green Tea Azuki Mooncake, Apricot Hazelnut Latte Mooncake and the Signature Durian Mooncake. Starbucks Malaysia also introduced a range of sweet treats which included the Starbucks Chocolate Noir Cake, Starbucks Red Velvet Baked Cheese Cake and Starbucks Red Velvet Chocolate Popping Heart for Valentine’s Day.

Starbucks Malaysia also introduced seasonal drinks such as the Burnt Caramel Macchiato and Chocolate Hazelnut Macchiato in its spring season campaign while the Roasted Marshmallow

S’Mores Frappuccino and Key Lime Pie Frappuccino were released for the summer season campaign.

In Singapore, Jollibean introduced a few new offerings to its existing menu which included the Brown Coconut Mee Chiang Kueh, Orange Coconut Mee Chiang Kueh and J Yuan Soy Pudding. Jollibean also launched a few seasonal pancakes such as Peanut & Sweet Corn Mini Rolls and Durian Cream Oval Maru in conjunction with Singapore’s 50th Birthday celebrations (SG50) while the sinfully Double & Triple Caramel Chocolate Maru was introduced during the Christmas season. Sushi Deli introduced an interesting range of brown rice sushi with popular ingredients such as unagi, kani mayo, salmon mayo, spicy tuna and others to provide more alternatives to their customers. Kopi Alley introduced a Yam & Butter Toast set during the Lunar New Year season as the Chinese character for “Yam” symbolises prosperity and luck.

neW ConCePT sToRe

In October 2015, BStarbucks opened its first premium Starbucks Reserve Store at the Gardens Mall, Kuala Lumpur to further enhance Starbucks’ leading brand position in the market. With its unique and remarkable store design, and the attentive skills and passionate delivery of its coffee masters, the Starbucks Reserve Store offers all coffee lovers not only excellent reserve coffee beans, but also an unprecedented coffee experience.

KRR introduced the Seri Lagenda Chicken meals in conjunction with the month of Ramadan.

The Exclusive Assorted Zesty Pineapple Delights presented by Starbucks Malaysia during the Hari Raya Aidilfitri festive season.

Sushi Deli’s new product offering – Brown Rice Maki.Four different flavours of Starbucks Mid-Autumn Mooncakes were launched during the Mooncake Festival.


mARKeTInG & PRomoTIons

All the brands under the Group are constantly adopting various marketing & promotion strategies to engage with their customers, and drive brand awareness and revenue for the Group. The companies reach out to potential customers through various marketing channels and promotional tools such as the rewarding brand loyalty cards, new menu offerings, sponsorships, social media, interactive programmes and on-ground events.

In celebration of KRR’s 22 years in Malaysia, BRoasters launched the “22 Deliciously Healthy Years” campaign in April 2016. Diners at KRR restaurants across Malaysia enjoyed a free Country-style Chicken Soup and Iced Lemon Tea with any main meal purchased as a token of appreciation for their support. Additionally, BRoasters also leveraged on their social media platform by contributing a Kenny’s Quarter Lite Meal to selected charitable organisations for every 22 likes received on their Facebook post.

As an advocate of healthy eating lifestyle, BRoasters believes that the practice begins at a young age and this inspired the introduction of its Muffins @ Schools campaign whereby BRoasters visited various public schools to carry out “Healthy Me, Happy Me” workshops and distributed muffins and goodie bags to students. The inaugural Muffins @ Schools event took place at SJK (C) Jalan Imbi with the participation of over 250 people including students, teachers and staff of the school.

In its continuous efforts to raise awareness amongst youth on healthy living, the ROASTERS Health Watch programme returned for the 10th time with a new theme entitled “Intervarsity Health War”. The programme brought together students from various colleges and universities to compete for the winning title and also the ultimate objective of being fitter and healthier. By working together with Original Bootcamp, BRoasters brings fitness outdoors to engage with the youths outside of their classrooms.

To enable customers to customise their Starbucks merchandise according to their personal preferences, BStarbucks introduced the “Starbucks Doodle It” campaign at several of its stores around Klang Valley in April 2016. Twelve local talented artists from Kuala Lumpur were stationed in these stores to help draw or doodle on Starbucks merchandise bought by customers. The programme received positive response from the public and is slowly expanding to other areas around Malaysia.

BStarbucks is also leveraging on the digital platform to engage with its followers through different promotional campaigns. During Ramadan 2015, BStarbucks launched the #jomSTARBUCKS campaign where different promotions were offered each week. The #jomSTARBUCKS campaign which means ‘Let’s Starbucks’ encouraged Muslim friends to drop by Starbucks stores after their “Tarawih” prayers and enjoy moments of connection. The #jomSTARBUCKS campaign was widely spread among digital followers, garnering nearly 5,000 shares on Facebook and


KRR’s representatives together with the sponsors and participants of the 10th ROASTERS Health Watch, themed “Intervarsity Health War”.

Students of SJK (C) Jalan Imbi, Kuala Lumpur were all smiles during the KRR “Healthy Me, Happy Me” workshop.

BStarbucks garnered nearly 900 Instagram postings with its #jomSTARBUCKS social media campaign.

The “Starbucks Doodle It” campaign showcased the creativity of local talents on Starbucks merchandise.


close to 900 postings with this hashtag on Instagram. Another interactive digital campaign, #MalaysianSmiles also garnered close to 1,000 photos shared where smiles from customers were collected through a few social media channels and a collage of “Malaysian Smiles” was created in conjunction with Malaysia Day on 16 September 2015.

Prior to the launching of its spring and summer seasonal campaigns, BStarbucks invited a number of customers for a sneak preview of its upcoming seasonal drinks at five different states to establish a stronger bond between its partners and customers. Other than tasting the new seasonal beverages first hand, the selected customers also had the first glimpse of upcoming seasonal merchandise which were available throughout the seasonal campaigns.

In August 2015, Starbucks sponsored lucky draw prizes as well as coffee for the participants of the Halal Fun Ride organised by the Department of Islamic Development Malaysia. The objective of the event, which attracted close to 3,500 participants was to increase public awareness on the importance of Malaysia’s halal certification and the event was significant in reinforcing Starbucks as a certified halal brand in Malaysia.

In Brunei, Starbucks is also actively engaging with the customers and communities. In partnership with Brunei Tourism, Starbucks Brunei launched the #BeautifulBrunei campaign, an initiative to promote Brunei as a tourist destination, featuring the local people,

culture and lifestyle. Participants shared breathtaking photos of Brunei on Starbucks Brunei’s social media platform and prizes were awarded to the winner. The campaign received favourable response from the public and collected over 300 photos.

In Singapore, Jollibean celebrated its 20th anniversary in September 2015 by rewarding its loyal base of customers with exclusive discounts. Jollibean also engaged with bloggers to elevate product awareness during the launch of its Caramel Chocolate Maru. Special promotions of the new products were also made available through Groupon to attract customers to try out the new offerings.

During the Lunar New Year celebration, Sushi Deli’s festive catalogues were distributed together with TODAY newspapers at numerous MRT stations around the residential and Central Business District areas to increase the circulation of the promotional materials. Facebook engagement activities such as giveaway of sushi festive platters were also initiated by Sushi Deli to interact with their digital followers. In addition, Sushi Deli collaborated with Deliveroo, an online delivery service portal to deliver its Lunar New Year special offering, “Fa Cai Lo Hei” to customers right at their doorsteps.


Participants and Starbucks’ partners at the #BeautifulBrunei campaign gathering hosted by Starbucks Brunei.

The first group of customers to taste the new seasonal beverage at the Starbucks Summer Sneak Preview 2016 event.

Jollibean’s and Sushi Deli’s promotional campaigns in Singapore.

BStarbucks offered fresh coffee to the participants of the Halal Fun Ride organised by the Department of Islamic Development Malaysia.


100%

Berjaya Starbucks Co�ee Company

Sdn Bhd

80%

Berjaya Food Supreme Sdn Bhd

100%

Berjaya Food Trading Sdn Bhd

70%

Berjaya Roasters (Cambodia) Ltd

100%

Berjaya Food (International)

Sdn Bhd

100%

Jollibean Foods Pte Ltd

100%

Berjaya Jollibean (M) Sdn Bhd

100%

Berjaya Roasters (M) Sdn Bhd

51%

PT Boga Lestari Sentosa

CoRPoRATesTRUCTUReAS AT 1 AUGUST 2016


GRoUPfInAnCIAl sUmmARY

Description

2016

UsD’000

2016

Rm’000

2015

Rm’000

2014

Rm’000

2013

Rm’000

2012

Rm’000

Revenue 142,583 554,363 376,780 150,369 121,915 88,598

Profit Before Tax 9,160 35,615 182,769 24,573 21,395 14,635

Profit For The Year 4,512 17,542 171,099 20,113 17,283 10,984

Profit Attributable To Shareholders 5,476 21,290 177,574 22,669 18,628 11,126

Share Capital # 48,648 189,144 187,137 134,556 130,522 71,738

Reserves # 54,105 210,359 207,282 28,231 12,226 (15,667)

net equity funds 102,753 399,503 394,419 162,787 142,748 56,071

Non-Controlling Interests (2,829) (11,000) (6,626) (641) 1,082 2,533

Total equity 99,924 388,503 387,793 162,146 143,830 58,604

Long Term Liabilities 45,681 177,606 198,363 5,151 5,071 4,097

Current Liabilities 46,436 180,545 128,076 25,543 18,164 16,670

Total equity and liabilities 192,041 746,654 714,232 192,840 167,065 79,371

Property, Plant & Equipment 44,657 173,625 155,504 38,899 30,236 25,335

Intangible Assets 116,166 451,652 447,321 16,088 16,008 1,340

Investment and Other Non-Current Assets 1,397 5,433 4,232 94,543 80,144 108

Current Assets 29,821 115,944 107,175 43,310 40,677 52,588

Total Assets 192,041 746,654 714,232 192,840 167,065 79,371

Net Assets Per Share (USD/RM) 0.27 1.06 1.05 0.60 0.55 0.39

Net Earnings Per Share (Cents/Sen) 1.46 5.66 54.41 8.58 8.17 7.83

Dividend Rate (%) 8.50 8.50 11.50 8.50 7.00 9.00

Net Dividend Amount (USD’000/RM’000) 4,118 16,011 21,451 11,651 9,161 6,433

notes:

Figures for 2012-2016 are for 12 months ended 30 April. Where additional shares are issued, the earnings per share are

calculated based on a weighted average number of shares.

# In applying merger method of accounting, comparative figures in the consolidated financial statements are restated as if

the issue of shares for the acquisition of Berjaya Roasters (M) Sdn Bhd had taken place as at the earliest date presented.

Exchange rate: USD1.00=RM3.888


88

,59

8

14,6

35

REVENUE(RM’000)

PROFIT FOR THE YEAR(RM’000)

NET EQUITY FUNDS(RM’000)

2012 2013 2014 20162015

100,000

200,000

300,000

400,000

500,000

600,000 55

4,3

63

376

,78

0

15

0,3

69

12

1,9

15

2012 2013 2014 20162015

17,5

42

50,000

100,000

150,000

200,000

171,

09

9

20

,113

17,2

83

10,9

84

56

,071 14

2,7

48

162

,78

7

39

4,4

19

2012 2013 2014 20162015

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

39

9,5

03

PROFIT BEFORE TAX(RM’000)

TOTAL ASSETS(RM’000)

TOTAL EQUITY(RM’000)

2012 2013 2014 20162015

35

,615

182

,76

9

24

,573

21,

39

5

50,000

100,000

150,000

200,000

2012 2013 2014 20162015

79

,371

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

167,

06

5

192

,84

0

714

,23

2

74

6,6

54

58

,60

4

2012 2013 2014 20162015

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

143

,83

0

162

,146

38

7,79

3

38

8,5

03

GRoUPfInAnCIAl HIGHlIGHTs


sTATemenT onCoRPoRATe GoVeRnAnCe

The Board of Directors (“Board”) of Berjaya Food Berhad recognises the importance of corporate governance in ensuring that the

interest of the Company and shareholders are protected. The Board is committed in ensuring that the Company and its subsidiaries

(“the Group”) carries out its business operations within the required standards of corporate governance as set out in the Malaysian

Code on Corporate Governance 2012 (“MCCG 2012”).

The Board is pleased to provide the following statement, which outlines the main corporate governance practices that were in place

throughout the financial year unless otherwise stated.

1. Roles AnD ResPonsIBIlITIes

functions of the Board and management

The Board is responsible for the performance and affairs of the Group and to provide leadership, guidance and setting strategic

direction for the Group.

The Board has delegated to the Executive Chairman and the Chief Executive Officer (“CEO”) the day-to-day management of

the Group. The Executive Chairman is responsible for the executive function of the management of the Company’s business

while the CEO leads the Senior Management of the Company in making and implementing the day-to-day decisions on the

business operations, managing resources and risks in pursuing the corporate objectives of the Group.

The CEO and Management meet regularly to review and monitor the performance of the Group’s operating divisions. The CEO

briefs the Board on the Group’s business operations and Management’s initiatives during the Board meetings.

Non-Executive Directors are not involved in the day-to-day management of the Group but contribute their own particular

expertise and experience in the development of the Group’s overall business strategy. Their participation as members of the

various Board Committees also contributed towards the enhancement of the corporate governance and controls of the Group.

Board Roles and Responsibilities

The Board assumes the following principal roles and responsibilities in discharging its fiduciary and leadership function:-

(1) Review, evaluate, adopt and approve the strategic plans and policies for the Company and the Group;

(2) Oversee and monitor the conduct of the businesses and financial performance and major capital commitments of the

Company and the Group;

(3) Review and adopt budgets and financial results of the Company and the Group, monitor compliance with applicable

accounting standards and the integrity and adequacy of financial information disclosure;

(4) Review and approve any major corporate proposals, new business ventures or joint ventures of the Group;

(5) Review, evaluate and approve any material acquisitions and disposals of undertakings and assets in the Group;

(6) Identify principal risks and assess the appropriate risk management systems to be implemented to manage these risks;

(7) Establish and oversee a succession planning programme for the Company and the Group including the remuneration

and compensation policy thereof;

(8) Establish, review and implement corporate communication policies with the shareholders and investors, other key

stakeholders and the public;

(9) Review and determine the adequacy and integrity of the internal control systems and management information of the

Company and the Group; and

(10) Develop a corporate code of conduct to address, amongst others, any conflicts of interest relating to directors, major

shareholders and/or management.



The Board is also supported by the different Board Committees to provide independent oversights of management and to

ensure that there are appropriate checks and balances. The Board Committees comprise the Audit and Risk Management

Committee (“ARMC”), Nomination Committee, Remuneration Committee and Employees’ Share Option Committee. Each of

the Board Committee operates within its respective terms of reference (“TOR”) that also clearly define its respective functions

and authorities.

The Board may form such other committees from time to time as dictated by business imperatives and/or to promote operational

efficiency.

Notwithstanding the above, the ultimate responsibility for decision making still lies with the Board.

ethical standards through Code of ethics

The Board has adopted a Code of Ethics for Directors (“Code”) which is incorporated in the Board Charter. The Code was

formulated to enhance the standard of corporate governance and to promote ethical conduct of the Directors.

The Group also has in place a Code of Conduct covering Business Ethics, workplace safety and employees’ personal conduct.

This is to ensure all employees maintain and uphold a high standard of ethical and professional conduct in the performance

of their duties and responsibilities. All employees are required to declare that they have received, read and understood the

provisions of the Code of Conduct.

sustainability strategies

The Board views the commitment to promote sustainability strategies in the environment, social and governance aspects as

part of its broader responsibility to all its various stakeholders and the communities in which it operates.

The Group strives to achieve a sustainable long term balance between meeting its business goals, preserving the environment

to sustain the ecosystem and improving the welfare of its employees and the communities in which it operates. The Group’s

efforts to promote sustainability initiatives for the environment, the communities in which it operates and its employees have

been set out in the Corporate Social Responsibility section of the Executive Chairman’s Statement in this Annual Report.

Access to Information and Advice

The Directors have full and timely access to information concerning the Company and the Group. The Directors are provided

with the relevant agenda and Board papers in sufficient time prior to Board meetings to enable them to have an overview of

matters to be discussed or reviewed at the meetings and to seek further clarifications, if any. The Board papers include reports

on the Group’s financial statements, operations and any relevant corporate developments and proposals.

The Board is supported by suitably qualified, experienced and competent Company Secretaries who are also members of a

professional body. The Company Secretaries play an advisory role to the Board in relation to the Company’s constitution and

advises the Board on any updates relating to new statutory and relevant regulatory requirements pertaining to the duties and

responsibilities of Directors as and when necessary. The Company Secretaries are also responsible in ensuring that Board

meeting procedures are followed and all the statutory records of the Company are properly maintained at the Registered

Office of the Company.

The Directors also have access to the advice and services of the Senior Management staff in the Group and they may also

obtain independent professional advice at the Company’s expense in furtherance of their duties whenever the need arises.

Board Charter

The Board has adopted a Board Charter to promote the standards of corporate governance and clarifies, amongst others, the

roles and responsibilities of the Board.

The Board Charter is subject to review by the Board annually to ensure that it remains consistent with the Board’s objectives

and responsibilities. The Board Charter is also available on the Company’s website at www.berjaya.com.



2. BoARD ComPosITIon

nomination Committee

The Company has a Nomination Committee, which comprises exclusively of Non-Executive Directors, with a majority of them

being independent. The members are:-

Datuk Zainun Aishah Binti Ahmad – Chairman/ Independent Non-Executive Director

Dato’ Mustapha Bin Abd Hamid – Independent Non-Executive Director

Tan Thiam Chai – Non-Independent Non-Executive Director

The Nomination Committee meets as and when required, and at least once a year.

Under its TOR, the Nomination Committee is tasked with the duties of, among others, the following:

- identifying, assessing and recommending the right candidates to the Board with the necessary skills, knowledge,

experience and competency for new appointments;

- conducting an annual assessment on the effectiveness of the Board as a whole (inter-alia, the required mix of skills,

size and composition, experience, core competencies and other qualities of the Board), the Board Committees and the

contribution of every Director (including the assessment of independence of the Independent Directors);

- recommending retiring Directors for re-election or re-appointment as Directors;

- ensuring orderly succession at the Board level and boardroom diversity; and

- ensuring adequate training and orientation are provided for new members of the Board.

The TOR of the Nomination Committee is available at the Company’s website at www.berjaya.com.

Develop, maintain and Review Criteria for Recruitment and Annual Assessment of Directors

Appointment to the Board and Re-election of Directors

The Board delegates to the Nomination Committee the responsibility of making recommendations on any potential candidate

for the appointment as a new Director. The Nomination Committee is responsible to ensure that the procedures for appointing

new Directors are transparent and rigorous and that appointments are made on merits.

The process for the appointment of a new Director is summarised in the sequence as follows:-

1. The candidate identified upon the recommendation by the existing Directors, Senior Management staff, shareholders

and/or other consultants;

2. In evaluating the suitability of candidates to the Board, the Nomination Committee considers, inter-alia, the competency,

experience, commitment, contribution and integrity of the candidates, and in the case of candidates proposed for

appointment as Independent Non-Executive Directors, the candidate’s independence;

3. Recommendation to be made by Nomination Committee to the Board. This also includes recommendation for appointment

as a member of the various Board Committees, where necessary; and

4. Decision to be made by the Board on the proposed new appointment, including appointment to the various Board

Committees.

The Company’s Articles of Association provides that at least one-third of the Directors are subject to retirement by rotation

at each Annual General Meeting (“AGM”) and that all Directors shall retire once in every three years, and are eligible to offer

themselves for re-election. The Articles of Association also provides that a Director who is appointed during the year shall be

subject to re-election at the next AGM to be held following his appointment.

Pursuant to Section 129(6) of the Companies Act, 1965, a Director who is over seventy (70) years of age shall retire at the

AGM of the Company, and may offer himself/herself for re-appointment to hold office until the next AGM.



The Nomination Committee is responsible for recommending to the Board those Directors who are eligible to stand for

re-election/re-appointment.

The Directors who will retire by rotation and eligible for re-election pursuant to Article 94 of the Company’s Articles of

Association at the forthcoming Seventh AGM are Dato’ Sri Robin Tan Yeong Ching and Dato’ Mustapha Bin Abd Hamid. The

profiles of these Directors are set out on pages 03 and 05 of this Annual Report.

The Senior Independent Director namely, Datuk Zainun Aishah Binti Ahmad, will attain the age of 70 years in September 2016.

Pursuant to Section 129(2) of the Companies Act, 1965, the office of Datuk Zainun Aishah Binti Ahmad shall become vacant

at the conclusion of the AGM commencing next after she attains the age of 70 years. Hence, she has been recommended for

re-appointment as a Director of the Company at the forthcoming Seventh AGM, pursuant to Section 129(6) of the Companies

Act, 1965 and her profile is set out on page 05 of this Annual Report.

Annual Assessment

The Nomination Committee reviews annually, the effectiveness of the Board and Board Committees as well as the performance

of individual directors. The evaluation involves individual Directors and Committee members completing separate evaluation

questionnaires regarding the processes of the Board and its Committees, their effectiveness and where improvements could be

considered. The criteria for the evaluation are guided by the Corporate Governance Guide – Towards Boardroom Excellence.

The evaluation process also involved a peer and self-review assessment, where each Director will assess their own performance

and that of their fellow Directors. These assessments and comments by all Directors were summarised and discussed at the

Nomination Committee meeting which were then reported to the Board at the Board meeting held thereafter. All assessments

and evaluations carried out by the Nomination Committee in the discharge of its duties are properly documented.

During the meeting held in June 2016, the Nomination Committee carried out the following activities:

- reviewed and assessed the mix of skills, expertise, composition, size and experience of the Board;

- reviewed and assessed the performance of each individual Director; independence of the Independent Directors;

effectiveness of the Board and the Board Committees;

- recommending Directors who are retiring and being eligible, for re-election and/or re-appointment; and

- reviewed the performance of the Audit and Risk Management Committee and its members.

Boardroom Diversity

The Board acknowledges the importance of boardroom diversity in terms of gender, age, nationality, ethnicity and socio-

economic background and recognises the benefits of this diversity. The Board is of the view that while promoting boardroom

diversity is essential, the normal selection criteria based on an effective blend of competencies, skills, extensive experience

and knowledge to strengthen the Board should remain a priority.

The Company does not set any specific target for boardroom diversity but will actively work towards achieving the appropriate

boardroom diversity.

Currently, the Board has two (2) female Directors out of six (6) Directors, representing 33% of the full Board. The Board is

satisfied with its current composition.

The Chairman of the Nomination Committee, Datuk Zainun Aishah Binti Ahmad, has been identified as the Senior Independent

Non-Executive Director of the Board to whom concerns may be conveyed.

Remuneration Policies and Procedures

The Board believes in a remuneration policy that fairly supports the Directors’ responsibilities and fiduciary duties in steering

the Group to achieve its long-term goals and enhance shareholders’ value. The Board’s objective in this respect is to offer a

competitive remuneration package in order to attract, develop and retain talented individuals to serve as directors.



The Remuneration Committee currently comprises the following members:-



Dato’ Sri Robin Tan Yeong Ching – Executive Chairman

The primary function of the Remuneration Committee is to set up the policy framework and to recommend to the Board on

remuneration packages and other terms of employment of the executive directors. The remuneration of Directors is determined

at levels which enables the Company to attract and retain Directors with the relevant experience and expertise to manage

the business of the Group effectively.

The determination of the remuneration for the Non-Executive Directors will be a matter to be decided by the Board as a whole

with the Director concerned abstaining from deliberations and voting on decision in respect of his/her individual remuneration

package. The Board recommends the Directors’ fees payable to Non-Executive Directors on a yearly basis to the shareholders

for approval at the AGM.

Details of Directors’ remuneration paid or payable to all Directors of the Company (both the Company and the Group) and

categorised into appropriate components for the financial year ended 30 April 2016 are as follows:-

Company

Rm

fees

salaries

and other

emoluments Bonus

Benefits

in-kind Total

Executive – 272,982 18,838 17,100 308,920

Non-Executive 60,000 7,800 – – 67,800

60,000 280,782 18,838 17,100 376,720

Group

Rm

fees

salaries

and other

emoluments Bonus

Benefits

in-kind Total

Executive 17,400 744,002 18,838 17,100 797,340

Non-Executive 60,000 7,800 – – 67,800

77,400 751,802 18,838 17,100 865,140

The number of Directors in office at the end of the financial year and their total remuneration from the Group categorised into

the various bands are as follows:-

number of Directors

executive non-executive

RM1 - RM50,000 – 2

RM750,001 - RM800,000 1 –

1 2



3. InDePenDenCe

Annual Assessment of Independence

The Board recognises the importance of independence and objectivity in its decision making process. The presence of the

Independent Non-Executive Directors is essential in providing unbiased and impartial opinion, advice and judgment to ensure

the interests of the Group, shareholders, employees, customers and other stakeholders in which the Group conducts its

businesses are well represented and taken into account.

The Board, through the Nomination Committee, assesses the independence of its Independent Non-Executive Directors based

on criteria set out in the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”).

The current Independent Directors of the Company namely, Datuk Zainun Aishah Binti Ahmad and Dato’ Mustapha Bin

Abd Hamid have fulfilled the criteria of “independence” as prescribed under Chapter 1 of the Listing Requirements of Bursa

Securities. The Company also fulfills the requirement to have at least one-third of its Board members being Independent

Non-Executive Directors.

Tenure of Independent Directors

The Board is of the view that the independence of the Independent Directors should not be determined solely or arbitrarily

by their tenure of service. The Board believes that continued contribution will provide stability and benefits to the Board and

the Company as a whole especially their invaluable knowledge of the Group and its operations gained through the years. The

calibre, qualification, experience and personal qualities, particularly of the Director’s integrity and objectivity in discharging

his responsibilities in the best interest of the Company, predominantly determines the ability of a Director to serve effectively

as an Independent Director.

As at the date of this Statement on Corporate Governance, none of the Independent Directors has served more than nine (9)

years on the Board.

However, where the tenure of an Independent Director exceeds a cumulative term of nine (9) years, the Board shall make

recommendation and provide justifications to shareholders at a general meeting should it seek to retain such Director as an

Independent Director. Alternatively, the Independent Director may continue to serve on the Board subject to the Director’s

re-designation as a Non-Independent Director.

separation of Positions of the Chairman and Chief executive officer

The Chairman of the Company is also holding an executive position and he is responsible for the executive function of the

management of the Company’s business. The Board is aware that it is not in compliance with the best practices of the MCCG

2012 which recommends that the Chairman of a company shall be a non-executive independent director.

However, the Board is satisfied with the executive capacity of the Chairman in view of his experience and knowledge of the

food business of the Group, and his directorship in the subsidiaries of the Company, namely, Berjaya Starbucks Coffee Company

Sdn Bhd and Berjaya Roasters (M) Sdn Bhd. The presence of the two (2) existing Independent Directors, though not forming

a majority of the Board members, is sufficient to provide the required checks and balances on the decision making process

of the Board. The significant contributions of the Independent Directors in the decision making process is evidenced in their

participation as members of the various committees of the Board. In addition, the existing Non-Independent Non-Executive

Directors will also help to provide views and contributions from a different perspective as they are not involved in the day-to-

day operations of the Group.

The Executive Chairman is elected by the Board and will preside at all Board meetings and general meetings of the Company.

The Executive Chairman will ensure that procedural rules are followed in the conduct of meetings and that decisions made

are formally recorded and adopted.



Board Composition and Balances

The Board composition represents a mix of knowledge, skills, and expertise which assist the Board in effectively discharging

its stewardship and responsibilities. The Board currently has six (6) members comprising the Executive Chairman, the CEO, two

(2) Independent Non-Executive Directors and two (2) Non-Independent Non-Executive Directors. The profiles of the Directors

are set out on pages 03 to 05 of this Annual Report.

The Board is satisfied with the current composition and size of the Board which provides sufficient diversity and yet allow for

effective decision making. The present composition of the Board is also in compliance with Paragraph 15.02 of the Listing

Requirements of Bursa Securities of at least 1/3 of its members being Independent Directors.

4. CommITmenT

Time Commitment

The Board meets regularly on a quarterly basis with additional meetings being convened as necessary. The Board is satisfied

with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of the

Company. During the financial year ended 30 April 2016, the Board met five (5) times and the attendance of the Directors at

the Board meetings were as follows:-

Directors Attendance

Dato’ Sri Robin Tan Yeong Ching 4/5

Dato’ Lee Kok Chuan 5/5

Tan Thiam Chai 5/5

Dato’ Zurainah Binti Musa 3/5

Datuk Zainun Aishah Binti Ahmad # 5/5

Dato’ Mustapha Bin Abd Hamid # 5/5

# Denotes Independent Non-Executive Director

All the Directors of the Company does not hold more than five (5) directorships in listed issuers as required under Paragraph

15.06 of the Listing Requirements. They are required to notify the Chairman of the Board before accepting any new directorships

outside the Group and indicating the time that will be spent on the new directorship. Similarly, the Chairman of the Board shall

also do likewise before taking up any additional appointment of directorships.

Directors’ Training

All the Directors have completed the Mandatory Accreditation Programme as required by Bursa Securities.

The Board believes that continuous training for Directors is vital for the Board members to enhance their skills and knowledge

and to enable them to discharge their duties effectively. As such, the Directors will continuously attend the necessary training

programmes, conferences, seminars and/or forums so as to keep abreast with the current developments in the various industries

as well as the current changes in laws and regulatory requirements.



During the year, the training programmes, seminars and conferences attended by the Directors were as follows:-

Directors Training Programmes/seminars/Conferences/forum

Dato’ Sri Robin Tan Yeong Ching - Global sustainability and impact investing forum 2015.

- Forbes Global Chief Executive Officer Conference in Manila –

Towards a winning session.

- Bursa Malaysia Focus Group Session on Annual General Meeting

Guide.

- Closed door session with Prime Minister, Ministers and Corporate

Chiefs.

Dato’ Lee Kok Chuan - Corporate Governance Statement Reporting Workshop: The

Interplay Between Corporate Governance, Non-Financial

Information and Investment Decision- What Boards of Listed

Companies Need to Know.

- Dialogue Session with Public Listed Companies “Opportunities

for Public Listed Companies in Shariah-compliant Landscape”.

Tan Thiam Chai - Enhanced Understanding of Risk Management & Internal Control

for Chief Financial Officers/Internal Auditors/Risk Officers.

- Dialogue Session with Public Listed Companies “Opportunities

for Public Listed Companies in Shariah-compliant Landscape”.

Dato’ Zurainah Binti Musa - Future of Auditors’ Reporting

• TheGameChangerforBoardroom.

- Ke arah pengukuhan agenda berpaksikan rakyat.

- Ring the Bell for gender equality.

Datuk Zainun Aishah Binti Ahmad - Directors’ Continuing Education Programmes on the following:-

• Doyourminorityshareholderstrustyou?

• IntegratedReporting

• EconomicOutlook

Dato’ Mustapha Bin Abd Hamid - Bursa Malaysia Corporate Governance Breakfast Series with

Directors

• Howtomaximiseinternalaudit.

- Future of Auditors’ Reporting

• TheGameChangerforBoardroom.

- Analysis of Corporate Governance Disclosure in Annual Reports.

The Board will, on a continuous basis, evaluate and determine the training needs of its members to assist them in the discharge

of their duties as Directors.

5. fInAnCIAl RePoRTInG

Compliance with Applicable financial Reporting standards

The Board strives to provide a clear, balanced and meaningful assessment of the Group’s financial performance

and prospects at the end of the financial year, through the annual audited financial statements and quarterly financial

reports, and corporate announcements on significant developments affecting the Company in accordance with the Listing

Requirements of Bursa Securities.

The Board is also responsible for ensuring the annual financial statements are prepared in accordance with the provisions of

the Companies Act, 1965 and the applicable financial reporting standards in Malaysia.



The Board is also assisted by the ARMC in the discharge of its duties on financial reporting and ensuring that the Group maintains

a proper financial reporting process and a high quality financial reporting. A full ARMC Report detailing its composition, TOR

and a summary of activities during the financial year is set out on pages 35 to 38 of this Annual Report.

statement of Directors’ Responsibility in respect of the financial statements

The Companies Act, 1965 (“the Act”) requires the Directors to prepare financial statements for each financial year which gives

a true and fair view of the state of affairs of the Company and of the Group and of the results and cash flows of the Company

and of the Group for that period. In preparing those financial statements, the Directors are required to:

- select suitable accounting policies and then apply them consistently;

- state whether applicable financial reporting standards have been followed, subject to any material departures being

disclosed and explained in the financial statements;

- make judgements and estimates that are reasonable and prudent; and

- prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will

continue in business.

The Directors are responsible for keeping accounting records which disclosed with reasonable accuracy, at any time, the

financial position of the Company and of the Group and to enable them to ensure that the financial statements comply with the

Act and applicable financial reporting standards in Malaysia. The Directors are also responsible for safeguarding the assets of

the Group and for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Assessment of external Auditors

The Board maintains a transparent and professional relationship with the External Auditors through the ARMC. Under the

existing practice, the ARMC invites External Auditors to attend its meetings at least twice a year to discuss their audit plan

and their audit findings on the Company’s yearly financial statements. In addition, the ARMC will also have private meetings

with the External Auditors without the presence of the CEO and Senior Management to enable exchange of views on issues

requiring attention.

It is the policy of the Company to undertake an annual assessment of the quality of audit which encompassed the performance

and quality of the External Auditors and their independence, objectivity and professionalism. This policy is delegated to the

ARMC and the assessment process involves identifying the areas of assessment, setting the minimum standard and devising

tools to obtain the relevant data. The areas of assessment include among others, the External Auditors’ calibre, quality processes,

audit team, audit scope, audit communication, audit governance and independence as well as the audit fees. Assessment

questionnaires were used as a tool to obtain input from the Company’s personnel who had constant contact with the external

audit team throughout the year.

To support the ARMC’s assessment of their independence, the External Auditors will provide the ARMC with a written

assurance confirming their independence throughout the conduct of the audit engagement in accordance with the relevant

professional and regulatory requirements. The External Auditors are required to declare their independence annually to the

ARMC as specified by the By-Laws issued by the Malaysian Institute of Accountants. The External Auditors have provided the

declaration in their annual audit plan presented to the ARMC of the Company.

The ARMC also ensures that the External Auditors are independent of the activities they audit and will review the contracts for

provision of non-audit services by the External Auditors. The recurring non-audit services were in respect of tax compliance,

services as scrutineers at the Company’s general meetings, the annual review of the Statement of Risk Management and

Internal Control. The non-recurring non-audit services are acting as reporting accountants for any corporate exercises.



During the financial year, the amount of non-audit fees paid/payable to the External Auditors by the Company and the Group

respectively for the financial year ended (“FYE”) 30 April 2016 were as follows:-

Company Group

fYe2016

Rm

fYe2015

Rm

fYe2016

Rm

fYe2015

Rm

Statutory audit fees paid/payable to:-

- Ernst & Young (“EY”) Malaysia 35,000 25,000 173,000 153,000

- Affiliates of EY Malaysia – – 13,000 13,000

Total (a) 35,000 25,000 186,000 166,000

Non-audit fees paid/payable to:-

- EY Malaysia 24,000 126,000* 24,000 126,000*

- Affiliates of EY Malaysia 3,600 3,600 26,900 26,900

Total (b) 27,600 129,600 50,900 152,900

% of non-audit fees (b/a) 79% 518% 27% 92%

* included the Accountants Report issued for the acquisition of Berjaya Starbucks Coffee Company Sdn Bhd.

In considering the nature and scope of non-audit fees, the ARMC was satisfied that they were not likely to create any conflict

or impair the independence and objectivity of the External Auditors.

Upon completion of the assessment, the ARMC will make recommendation for re-appointment of the External Auditors to the

Board. The proposed appointment will be subject to shareholders’ approval at the AGM.

6. RIsKs mAnAGemenT

sound framework to manage Risks

The Board entrusts the ARMC with the overall responsibility to regularly review and monitor risk management activities of the

Group and to approve appropriate risk management procedures and measurement methodologies.

The Company continues to maintain and review its internal control procedures to ensure, as far as possible, the protection of

its assets and its shareholders’ investments.

Internal Audit function

The Board acknowledges its overall responsibility for the Group’s system of internal control and its effectiveness as well as

reviewing its adequacy and integrity to safeguard shareholders’ investments and the Group’s assets.

The internal audit function of the Company is provided by the Internal Audit Division of the ultimate holding company, Berjaya

Corporation Berhad, based on the plan approved by the ARMC, to assist the Board in maintaining a sound system of internal

control for the purposes of safeguarding shareholders’ investment and the Group’s assets.

The Statement on Risk Management and Internal Control set out on pages 32 to 34 of this Annual Report provides an overview

of the state of internal controls within the Group.



7. TImelY DIsClosURes

The Board will ensure that it adheres to and comply with the disclosure requirements of the Main Market Listing

Requirements of Bursa Securities as well as the Corporate Disclosure Guide issued by Bursa Securities.

The Board acknowledges the importance of timely and equal dissemination of material information to the shareholders,

investors and the public at large. As such, the Board accords a high priority in ensuring that information is made available and

disseminated as early as possible.

The Company maintains a website at www.berjaya.com where shareholders as well as members of the public can access the

latest information on the Company and the Group. Alternatively, they may obtain the Company’s latest announcements via

the website of Bursa Securities at www.bursamalaysia.com.

8. RelATIonsHIP BeTWeen ComPAnY AnD sHAReHolDeRs

shareholders Participation at General meetings

The Company fully recognises the rights of the shareholders and encourages them to exercise their rights at the Company’s

general meetings. The AGM remains the principal forum for dialogue with shareholders where they may seek clarifications

on the Group’s businesses.

The Company despatches its notice of meeting at least twenty-one (21) days before the AGM together with a copy of the

Annual Report.

At the AGM, the Senior General Manager of Group Accounts and Budgets provides a brief financial overview of the financial

year’s performance to the shareholders. The shareholders are also invited to raise questions pertaining to the business activities

of the Group during the AGM. The External Auditors are also present to provide professional and independent clarification on

issues and concerns raised by the shareholders.

Poll Voting

In line with the MCCG 2012, all the resolutions passed by the shareholders at the previous AGM held on 5 October 2015 were

voted by way of a poll. The shareholders were briefed on the voting procedures by the Share Registrar while the results of the

poll were verified and announced by the independent scrutineer, EY.

Pursuant to the Paragraph 8.29A(1) of the Listing Requirements of Bursa Securities, the Company is required to ensure that

any resolution set out in the notice of general meetings is voted by poll.

effective Communication and Proactive engagements with shareholders

The Company recognises the importance of being transparent and accountable to its shareholders and, as such, maintains

an active and constructive communication policy that enables the Board and Management to communicate effectively with

investors, financial community and the public generally. The various channels of communications are through the quarterly

announcements on financial results to Bursa Securities, relevant announcements and circulars, meetings with analysts and fund

managers, general meetings of shareholders and through the Company’s website at www.berjaya.com where shareholders

can access corporate information, annual reports, press release, financial information and Company’s announcements.

9. ComPlIAnCe WITH THe mCCG 2012

Other than as disclosed and/or explained in the Statement on Corporate Governance, the Board is satisfied that the Company

has, in all material aspects, complied with the principles and recommendations of the MCCG 2012 during the financial year

ended 30 April 2016.


sTATemenT onRIsK mAnAGemenT AnD InTeRnAl ConTRol

InTRoDUCTIon

The Malaysian Code on Corporate Governance 2012 requires listed companies to maintain a sound system of internal control

to safeguard shareholders’ investments and the assets of the Company and its subsidiaries (“the Group”). The Bursa Malaysia

Securities Berhad (“Bursa Securities”) Main Market Listing Requirements require Directors of listed companies to include a

statement in annual reports on the state of their risk managements and internal controls. The Statement on Internal Control:

Guidance for Directors of Public Listed Companies (“Guidance”) provides guidance for compliance with these requirements.

The Board’s Statement On Risk Management and Internal Control (“SORMIC”), which has been prepared in accordance with

the Guidance, is set out below.

ResPonsIBIlITY

The Board of Directors recognises the importance of sound internal controls and risk management practices to good corporate

governance. The Board affirms its overall responsibility for the Group’s systems of internal controls and risk management, and

for reviewing the adequacy and integrity of those systems. It should be noted, however, that such systems are designed to

manage rather than eliminate the risk of failure to achieve business objectives. In addition, it should be noted that any system

could provide only reasonable, and not absolute assurance, against material misstatement or loss.

The Group had in place an ongoing process for identifying, evaluating, monitoring and managing the significant risks affecting

the achievement of its business objectives throughout the period. This process is regularly reviewed by the Board, which

dedicates time for discussion on this subject.

The Board has undertaken a review of the adequacy and effectiveness of the risk management and internal control system and

concluded that the risk management and internal control system is adequate and effective. Further, the Board has obtained

assurance from the Chief Executive Officer and the director primarily responsible for the management of the financial affairs

of the Company that the Group’s risk management and internal control system is operating adequately and effectively, in all

material aspects.

InTeRnAl ConTRol PRoCesses

The key aspects of the internal control process are as follows:

- The business units identify the areas of control relevant to their business, design the internal control procedures and

document the procedures in manuals.

- The internal auditors of the Group establish the annual audit plan and table the plan to the Audit and Risk Management

Committee (“ARMC”) for approval.

- The internal auditors perform the audit and present their audit reports to the ARMC, highlighting any shortcomings by

the business units in implementing the controls and the remedial procedures implemented by the business units.


InTeRnAl AUDIT fUnCTIon

The Board recognises that effective monitoring on a continuous basis is a vital component of a sound internal control system.

In this respect, the ARMC carries out an internal audit function to monitor and assess the effectiveness of the internal control

system. Observations from internal audits were presented to the ARMC together with management’s response and proposed

action plans for its review. The action plans were then followed up during subsequent internal audits with implementation

status reported to the ARMC.

The internal audit function is outsourced to the Group Internal Audit Division of Berjaya Corporation Berhad, which reports

directly to the ARMC. The scope of work covered by the internal audit function is determined by the ARMC after careful

consideration and discussion of the audit plan with the Board.

The Board through the ARMC regularly receives and reviews reports on internal control, which include highlights on significant

risks affecting the Group, from its internal audit function.

oTHeR KeY elemenTs of InTeRnAl ConTRol

The other key elements of the Group’s internal control systems are described below:-

- Clearly defined delegation of responsibilities to committees of the Board and to management of Head Office and

operating units, including authorisation level for all aspects of the business which are set out in an authority matrix;

- Regular and comprehensive information provided to management, covering financial performance and key business

indicators, such as cashflow performance;

- Regular visits to operating units by senior management.

The system of internal control was satisfactory and has not resulted in any material losses, contingencies or uncertainties that

would require disclosure in the Group’s Annual Report.

RIsK mAnAGemenT fRAmeWoRK

The Board has established an organisation structure with clearly defined lines of accountability and delegated authority. It

has extended the responsibilities of the ARMC to include the work of monitoring all internal controls and risk management.

Its review covers matters such as responses to significant risks identified, output from the monitoring process and changes

made to the internal control systems.



RIsK mAnAGemenT PRoCess

The key aspects of the risk management process are as follows:

- The business units are required to identify the risks relevant to their businesses.

- The risks are then assessed based on the probability of their occurrence and are evaluated as Low, Medium or High. The

level of residual risk is determined after evaluating the effectiveness of controls and mitigating measures.

- The business units develop control procedures or action plans to either prevent the occurrence or reduce the impact

upon its occurrence.

- The business units are required to update their risk profiles and review their processes in monitoring the risks periodically.

- On a quarterly basis, the business units are required to prepare a report summarising the significant risks and status of

action plan. Selected reports will be submitted to the ARMC for review and deliberation.

ConTRol self-AssessmenT

Having identified the risks to achieving the Group’s strategic objectives, each functional area is required to document the

management and mitigating actions for each significant risk. New areas are introduced for assessment as the business risk

profile changes and are reviewed by the management team.

Each quarter, the Group Internal Audit Division will prepare a risk profile which summarises the risks, the controls and

processes for managing them and the means for assuring management that the processes are effective. This information will

be updated in a timely manner and reviewed by the management team. The Group Internal Audit Division then reports to the

Board of any significant changes in the business and the external environment that affect key risks.

The external auditors form an opinion on the financial statements of the Group based on their annual statutory audit. Any

areas for improvement identified during the course of audit are highlighted to the attention of the ARMC through management

letters, or are articulated at the ARMC meetings. The ARMC also holds private meetings with the external auditors to have

exchange of views on any areas that require their attention. Apart from the statutory audit, the external auditors also review

the SORMIC in accordance with Paragraph 15.23 of the Main Market Listing Requirements of Bursa Securities. Based on their

review, the external auditors have reported to the Board that nothing has come to their attention that causes them to believe

that the disclosures in SORMIC are inconsistent with their understanding of the ongoing processes that the Board has in place

for identifying, evaluating and managing the significant risks in achieving the objectives and strategies of the Group.

Moving forward, the Company will further enhance its risks and controls identification and monitoring methodology. In addition,

the Group Internal Audit Division undertakes to broaden the development and refinement of its risk-based techniques,

enhance the level of staff expertise and benchmark itself against global best practices in risk management.



AUDIT AnD RIsK mAnAGemenTCommITTee RePoRT

The Board of Directors of Berjaya Food Berhad (“BFood”) is pleased to present the report of the Audit and Risk Management

Committee (“the ARMC”) for the financial year ended 30 April 2016.

memBeRs AnD meeTInG ATTenDAnCe

The members of the ARMC are as follows:-



Tan Thiam Chai – Non-Independent Non-Executive Director

The ARMC held five (5) meetings during the financial year ended 30 April 2016. The details of attendance of the ARMC members

are as follows:-

Directors Attendance

Datuk Zainun Aishah Binti Ahmad 5/5

Dato’ Mustapha Bin Abd Hamid 5/5

Tan Thiam Chai 5/5

The ARMC meetings were convened with proper notices and agenda and these were distributed to all members of the ARMC

with sufficient notification. The minutes of each of the ARMC meetings were recorded and tabled for confirmation at the next

ARMC meeting and tabled at the Board meeting for the Directors’ review and notation.

The Chief Executive Officer was invited to attend all the ARMC meetings to report on the overall operations of the Company

and its subsidiaries (“the Group”) while the Senior Management of the relevant operations was invited to provide clarification

on the audit and risk related issues of their respective operations. The General Manager of Group Internal Audit as well as

the Senior General Manager of Group Accounts and Budgets of Berjaya Corporation Berhad were also invited to attend the

ARMC meetings. The External Auditors were invited to attend three (3) of these meetings.

sUmmARY of ACTIVITIes AnD WoRK of THe AUDIT AnD RIsK mAnAGemenT CommITTee

The duties and responsibilities of the ARMC are set out in its terms of reference, a copy of which is available at www.berjaya.com.


In discharging its duties and responsibilities, the ARMC had undertaken the following activities and work during the year:-

financial Reporting

(a) Reviewed the quarterly financial statements including the draft announcements pertaining thereto and made recommendations

to the Board for approval of the same as follows:-

Date of meetings Review of Quarterly financial statements

15 June 2015 Fourth quarter results as well as the unaudited results of the Group for the financial year ended

30 April 2015

11 September 2015 First quarter results for financial year ended 30 April 2016

9 December 2015 Second quarter results for financial year ended 30 April 2016

9 March 2016 Third quarter results for financial year ended 30 April 2016

The above review is to ensure that the Company’s quarterly financial reporting and disclosures present a true and fair

view of the Group’s financial position and performance and are in compliance with the Malaysian Financial Reporting

Standard 134 - Interim Financial Reporting Standards in Malaysia and International Accounting Standard 34 - Interim

Financial Reporting as well as the applicable disclosure provisions of the Listing Requirements of Bursa Malaysia

Securities Berhad.

(b) Reviewed and made recommendations to the Board in respect of the audited financial statements of the Company and the

Group for the financial year ended 30 April 2015 at its meeting held on 21 August 2015 and to ensure that it presented

a true and fair view of the Company’s financial position and performance for the year and compliance with regulatory

requirements. Prior to that, the ARMC had reviewed the status report on the Audit Plan for financial year ended 30 April

2015 prepared by the External Auditors at the meeting held on 15 June 2015.

external Audit

(a) Evaluated the performance of the External Auditors for the financial year ended 30 April 2015 covering areas such as

calibre, quality processes, audit team, audit scope, audit communication, audit governance and independence as well

as the audit fees of the External Auditors. The ARMC, having been satisfied with the independence, suitability and

performance of Messrs Ernst & Young (“EY”), had recommended to the Board for approval of the re-appointment of EY

as External Auditors for the ensuing financial year end of 30 April 2016 at its meeting held on 21 August 2015.

(b) Discussed and considered the significant accounting adjustments and auditing issues arising from the interim audit as

well as the final audit with the External Auditors. The ARMC also had a private discussion with the External Auditors on

21 August 2015 without the presence of Management during the review of the audited financial statements for the year

ended 30 April 2015 to discuss any problems/issues arising from the final audit and the assistance given by the employees

during the course of audit by External Auditors.

(c) Reviewed with the External Auditors at the meeting held on 9 March 2016, their audit plan for the financial year end of

30 April 2016, outlining the audit scope, methodology and timetable, audit materiality, areas of focus, fraud consideration

and the risk of management override and also the new and revised auditors reporting standards.




Internal Audit

(a) Reviewed the Internal Audit Reports on the Company’s subsidiaries namely, PT Boga Lestari Sentosa (“PT Boga”), Berjaya

Starbucks Coffee Company Sdn Bhd (“BStarbucks”), Berjaya Roasters (M) Sdn Bhd (“BRoasters”), Jollibean Foods Pte

Ltd (“JFPL”) during the financial year under review. The ARMC also reviewed the audit findings and recommendations to

improve any weaknesses or non-compliance and the respective Management’s responses thereto. The Internal Auditors

monitored the implementation of Management’s action plan on outstanding issues through follow up reports to ensure

that all key risks and control weaknesses are being properly addressed.

(b) Reviewed and approved the Internal Audit Plan for financial year ending 30 April 2017 to ensure that the scope and

coverage of the internal audit on the operations of the BFood Group is adequate and comprehensive and that all the risk

areas are audited annually.

Recurrent Related Party Transactions

(a) Reviewed the Circular to Shareholders in connection with the Recurrent Related Party Transactions (“RRPT”) that arose

within the Group to ensure that the transactions are fair and reasonable to, and are not to the detriment of, the minority

shareholders.

The framework set up for identifying and monitoring the RRPT includes inter-alia, the following:-

(i) The transaction prices are based on prevailing market rates/prices that are agreed upon under similar commercial

terms for transactions with third parties, business practices and policies and on terms which are generally in line

with industry norms;

(ii) The related parties and interested Directors will be notified of the method and/or procedures of the RRPT for the

BFood Group;

(iii) Records of RRPT will be retained and compiled by the Group accountant for submission to the ARMC for review;

(iv) The ARMC is to provide a statement that it has reviewed the terms of the RRPT to ensure that such transactions are

undertaken based on terms not more favourable to the related parties than those generally available to the public,

are not detrimental to the minority shareholders and are in the best interest of the BFood Group;

(v) The ARMC also reviewed the procedures and processes with regards to the RRPT on a half yearly basis to ensure

that the transactions are within the approved mandate;

(vi) Directors who have any interest in any RRPT shall abstain from Board deliberations and voting and will ensure that

they and any person connected with them will also abstain from voting on the resolution(s) at the Extraordinary

General Meeting or Annual General Meeting to be convened for the purpose; and

(vii) Disclosures will be made in the annual report on the breakdown of the aggregate value of the RRPT during the

financial year, amongst others, based on the following information:-

(a) the type of the RRPT made; and

(b) the names of the related parties involved in each type of the RRPT made and their relationships with the

BFood Group.


Risk management Activities

(a) Reviewed the risk management activities on the Company’s subsidiaries namely, PT Boga, BStarbucks, BRoasters and JFPL including the risk descriptions, risk mitigation strategies and controls and its existing controls to ensure the business activities and risk areas are re-aligned and enhanced on an on-going basis.

(b) Reviewed the summary of the risk register covering areas such as the likelihood of occurrence, the impact of the risks, risk score, risk treatment, risk owner and control effectiveness to ensure that the management of the relevant risks is appropriately placed within the Group.

other Activities

(a) Reviewed and recommended to the Board for approval, the ARMC Report, Statement on Corporate Governance and Statement on Risk Management and Internal Control for inclusion in the 2015 Annual Report.

(b ) Verified the allocation and movement of the Employee Share Option Scheme (“ESOS”) for the financial year ended 30 April 2015 to ensure that it had been carried out according to the criteria and matrix stipulated in the ESOS’s Bylaws.

sUmmARY of WoRK of THe InTeRnAl AUDIT fUnCTIon

The Internal Audit Division of Berjaya Corporation Berhad was engaged to undertake the internal audit function that would enable the ARMC to discharge its duties and responsibilities. Their role is to provide the ARMC with independent and objective reports on the state of internal controls of the operating units within the Group and the extent of compliance with the Group’s established policies, procedures and statutory requirements.

The activities of the Internal Audit Division are guided by the Internal Audit Charter and the Internal Audit Division adopts a risk-based approach focusing on high risk areas. All high risk activities in each auditable area are audited annually.

For the financial year under review, the Internal Audit Division conducted audit assignments on the operating units of the Group involved in the development and operation of the “Starbucks Coffee” stores in Malaysia and Brunei, “Kenny Rogers Roasters” chain of restaurants in Malaysia, and “Jollibean”, “Sushi Deli” & “Kopi Alley” outlets in Singapore.

The activities undertaken by the Internal Audit Division during the financial year ended 30 April 2016 included the following:-

1. Tabled Internal Audit Plan for the ARMC’s review and endorsement.

2. Reviewed the existing systems, controls and governance processes of the operating units within the Group.

3. Conducted audit reviews and evaluated risk exposures relating to the Group’s governance process and system of internal controls on reliability and integrity of financial and operational information, safeguarding of assets, efficiency of operations, compliance with established policies and procedures and statutory requirements.

4. Provided recommendations to assist the operating units and the Group in accomplishing its internal control requirements by suggesting improvements to the control processes.

5. Issued internal audit reports incorporating audit recommendations and Management’s responses in relation to audit findings on weaknesses in the systems and controls to the ARMC and the management of the respective operations.

6. Presented internal audit reports to the ARMC for review.

7. Followed up review to ensure that the agreed internal audit recommendations are effectively implemented.

The cost incurred for the Internal Audit function in respect of the financial year ended 30 April 2016 was approximately RM125,350.

TeRms of RefeRenCe of THe ARmC

The terms of reference of the ARMC can be viewed on the Company’s website at www.berjaya.com.



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